Inflation for people in massive debt (politicians, economy, money, stimulus)
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Explain how you perceive inflation for some person with say $50,000 in debt. One with low inflation one with high? How do you think it would effect the nation with higher inflation making it easier to pay off loans?
Historically, high, unpredictable inflation rates lead to high interest rates, since lenders must get a high enough return to justify the high risk. The individual with lots of debt is much better off over the long run in an economy with low inflation and low interest rates, since more credit is available in that stable economy, there are more jobs, and your home increases more in real value, letting you refinance and gain greater equity to pay off those debts. Long term mortgages, business loans, and contracts become more viable, so you get more business activity in that environment.
Nobel laureate Milton Friedman said that the goal of monetary policy is simply to keep inflation between 0-2%. The long term benefits of this are harder to see than the easy stimulus of emitting a flood of notes into the economy. Since we no longer have money backed by gold and silver, we have a currency backed up by nothing more than experimental tinkering by spend happy politicians, always looking for politically easy money.
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